THE SOURCE BLOG

Pharmacy Benefit Manager (PBM)

The theme last month in litigation and enforcement action seems to be drug pricing. As the national debate surrounding rising prescription drug prices continues to heat up, we are seeing increasing legal action targeting the cause of such price hikes at the private, state, and federal levels. In our highlights this month, we look at how drug manufacturers and pharmacy benefit managers are coming under fire for their drug pricing practices, and how two states have turned to the Supreme Court to salvage their laws designed to rein in rising …

AB 315, considered to be a complementary bill to SB 17, which mandated prescription drug pricing transparency, is an important bill that would ensure more transparency of pharmacy benefit managers (PBMs) by regulating PBMs and gathering data on how PBMs impact the dispensing of certain prescription drugs. The intent of the bill is to allow consumers to purchase drugs at the lowest price by allowing purchasers, like health plans, to keep PBMs accountable for the savings PBMs promised. However, this bill almost didn’t come to be. AB 315 was sent …

In this month’s Litigation and Enforcement Highlights, we recap two small but meaningful wins in courts for state legislation aimed at controlling rising drug prices. We also take a peek at the newest developments of two potential mega mergers and the legal challenge against the Affordable Care Act, both of which could change the landscape of the healthcare industry. Judge Boots Challenge Against California’s Transparency Law on Technicality In the latest development of the legal challenge against California’s recently passed SB 17, the U.S. District Court for the Eastern …

Year two of California’s 2017-2018 legislative session continues to be an active one with the introduction of new innovative healthcare bills. As lawmakers work diligently, this month’s California Legislative Beat continues to look at some 2018 bills that can potentially change the California healthcare landscape. AB 2499: This bill would increase the medical loss ratio (MLR) by 5%, from 85% to 90% for a health plan or health insurer in the large group market, and from 80% to 85% for a health plan or health insurer in the individual market. …

On May 11, 2018, the Trump Administration released American Patients First, a blueprint to lower drug costs (the blueprint). The report details four challenges with the prescription drug market, including high list prices for drugs, high and rising out-of-pocket costs for patients, government programs that overpay for drugs due to the lack of negotiation tools, and foreign governments “free-riding” off of American investment in innovation. To address these challenges, the report also lays out four key strategies for reform, including a list of more than fifty recommendations with both immediate and …

Several major court decisions were handed down last month that may leave lasting impacts in terms of price and competition in the healthcare industry. Specifically, the 4thCircuit Court of Appeals ruled Maryland’s Price Gouging Law unconstitutional, while the Supreme Court upheld inter partes review, a controversial patent review process. In antitrust enforcement, the Justice Department began its review of the Cigna-Express Scripts merger. 4thCircuit Strikes Down Maryland Price Gouging Law In a significant victory for the pharmaceutical industry, the 4thU.S. Circuit Court of Appeals found Maryland’s landmark 2017 law, …

Rising prescription drug prices concern nearly all Americans, with 80% reporting that drug prices are “unreasonable”. The problem of rising drug expenditures is particularly acute for state Medicaid programs, which provide health coverage for low-income and disabled Americans. Medicaid serves nearly one in five Americans including many with chronic conditions, and purchases about 10% of total prescription medications dispensed in the U.S.[1] Furthermore, Medicaid’s nationwide drug spending increased almost 50% between 2013 and 2016 (from $22.4 billion to $33.4 billion).[2] In a survey of Medicaid programs, 36 states reported increased cost containment efforts for prescription drugs …

Happy May! In this edition of the Source Roundup, we cover four academic articles and reports from March and April. The topics this month include: 1) the unfilled promise of price transparency to encourage price shopping, 2) FDA’s actions on prescription drug prices, 3) the phenomenon of overpayment for prescription drugs, and 4) results of Maryland’s All-Payer global hospital budgeting program. Unfulfilled Promise of Price Transparency to Encourage Price ShoppingIn Promise and Reality of Price Transparency, a health policy report published by the New England Journal of Medicine, authors Ateev Mehrotra, Michael …

Last month, we reviewed how the California Assembly is trying to understand cost drivers of healthcare overall. As California has the highest retail drug spending with prescription drug expenditures outpacing overall healthcare spending, high drug pricing has become a specific concern for the Legislature.[1] For the past few years, the Legislature has used bills[2] (like SB 17 (2017)), resolutions (like SJR 29 (2015)), and informational hearings to better understand and control high drug pricing. For example, the Assembly Health Committee (“Committee”) began a series of hearings to understand prescription drug …